As someone who's dabbled in residential rental properties, you better believe any additional taxes would be passed on to the tenants. And if it made me really angry, I might even add a "fuel surcharge" and "processing fee".

Primum non nocere:As someone who's dabbled in residential rental properties, you better believe any additional taxes would be passed on to the tenants. And if it made me really angry, I might even add a "fuel surcharge" and "processing fee".

But that's not quite true: the rents that are charged are going to equal what people are willing to pay for them. Unless you're already at equilibrium, if you raise the rents, you're just not getting as much profit as you would have otherwise. Now that profit is accruing to the government instead.

Angry Drunk Bureaucrat:Primum non nocere: As someone who's dabbled in residential rental properties, you better believe any additional taxes would be passed on to the tenants. And if it made me really angry, I might even add a "fuel surcharge" and "processing fee".

But that's not quite true: the rents that are charged are going to equal what people are willing to pay for them. Unless you're already at equilibrium, if you raise the rents, you're just not getting as much profit as you would have otherwise. Now that profit is accruing to the government instead.

if you increase costs then your profit maximizing price is going to increase too for the same number of units sold.

While I'm open to the idea, it would be nice if the article actually had some numbers in there to let us know how this would work.

Primum non nocere:As someone who's dabbled in residential rental properties, you better believe any additional taxes would be passed on to the tenants. And if it made me really angry, I might even add a "fuel surcharge" and "processing fee".

If all land was taxed the same, your desire to 'pass' that on to you tenants would be entirely irrelevant, since that would be the market equilibrium.

You guys are right and have stated the issues in more formal economic/market terms.

My point is that you can tell when a proposed tax is out of sense of fairness or out of a sense of "soak the rich". For the latter, it seems most schemes won't achieve their aims because the pain will just be passed-on somehow and to some degree. Luxury taxes in the 1990's on yachts hurt machinists and dockworkers first. Now for those of a certain ideologic persuasion, maybe there is the perfect tax against the rich that would have no downstream effects on the non-1%ers. A simple raise in capital gains rate?

Also, it would take a constitutional amendment to get around the apportionment clause. The whole reason that ad valorem taxes have not been imposed at the Federal level is because of the 16th amendment.

It's such a simple solution that applies something we already knows works to an area where it would intrinsically work extra well due to the motivations involved, and would target one of our number 1 sources of inequality.

Primum non nocere:You guys are right and have stated the issues in more formal economic/market terms.

My point is that you can tell when a proposed tax is out of sense of fairness or out of a sense of "soak the rich". For the latter, it seems most schemes won't achieve their aims because the pain will just be passed-on somehow and to some degree. Luxury taxes in the 1990's on yachts hurt machinists and dockworkers first. Now for those of a certain ideologic persuasion, maybe there is the perfect tax against the rich that would have no downstream effects on the non-1%ers. A simple raise inelimination of the capital gains rate?

Basically, it's this: land is a natural good. The value of unimproved land increases due to social and not natural causes, so it behooves society to tax that value so as to remove this unearned advantage to the property owner and use that value for society. This does not apply to improvements to the property, because those improvements benefit society and any profits therefrom should revert to the entrepreneur.

No. Your property tax is based on the value of the land as well as the building or fixtures on top of it. He's suggesting that we actually only tax the value of the land and not the things on top of it. So, if you own 2 acres of floodplain that's not commercially feasable to develop, well, your land (with nothing on it) isn't worth much. However, if you're Mcdonald's and actually own the real estate under every restaurant, you pay a tax on the value of that land, without regard for what's built on top of it. It also means you don't have Mcdonald's 1) pay corporate income tax or 2) need to engage in shenannigans to try to avoid income tax.

"Despite this, the new developments wouldn't push rents up throughout the rest of the neighborhood, because the increased land value would be taxed. The rest of the apartment buildings in the area didn't get any nicer. So why should they cost more?"

Clearly someone doesn't understand how gentrification works. Property value and rent goes up when it's next to expensive houses owned by rich people and goes down when it's next to poor people.

DamnYankees:The amount of people dismissing this out of hand is pretty interesting. What's so objectionable about this?

Land as a social stratification tool goes waaaaaaaay back. Lots of Real Americans can only pine for the days of feudal landlords skimming the cream of their tenant farmers, because of divine sanction and breeding and furthermore.